P resident Bush, who took the oath of office for a second term yesterday, will kick off this year's debate on spending and policy priorities when he sends his fiscal 2006 budget to Congress in early February. Federal employees and retirees have a huge stake in the outcome of that debate.
To be sure, much of the president's management agenda for the government will remain unchanged. Bush administration officials plan to keep emphasizing the importance of putting federal jobs up for bid as a way to lower costs -- called competitive sourcing -- and to continue championing an initiative that links budget decisions to program performance.
 
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But federal employees will see other, significant workplace changes this year. The Defense and Homeland Security departments are moving away from the decades-old General Schedule pay system and into systems that determine raises according to more rigorous job performance ratings. The 15 agencies in the intelligence community will soon get a new leader and management team.
More important, at least in the short term, may be the budget squeeze that employees will face in their agencies.
Financing the war against terrorism and military operations in Iraq probably will divert funding in fiscal 2006 from domestic agencies to Defense and Homeland Security. Agencies that receive little or no increase in operating funds will find it difficult to expand their workforces, buy the latest technology and improve training for employees.
The federal deficit also will add pressure for budget reductions that could nick federal employees and retirees. For years, the Congressional Budget Office has maintained a list of options -- such as revamping federal health insurance and retirement benefits -- that would produce long-term budget savings.
The National Association of Retired Federal Employees, which has about 400,000 members, says in this month's issue of Retirement Life magazine that NARFE has been warned by congressional allies to expect a difficult year.
According to NARFE officials Judy Park and Dan Adcock, possible budget reductions might include cancellation of cost-of-living adjustments for federal pensions, a smaller government contribution for health insurance premiums, increases in employee retirement contributions and a change in the annuity calculation formula.
Some think tanks that look favorably on the president are urging the administration to scale back spending. The Heritage Foundation, in its 2005 Mandate for Leadership guide to smaller government, offers an array of suggestions, including a recommendation that the administration energize its competitive sourcing initiative.
Bush's 2001 plan for contracting out federal work "has been watered down in response to congressional efforts to protect civil servants and by agency reluctance to make tough choices to improve operations and reduce costs," Heritage fellow Ronald D. Utt writes. He urges the administration to adopt more ambitious competitive sourcing goals.
Office of Management and Budget officials have said they plan to step up efforts to explain the competitive sourcing initiative to members of Congress and to show that projected savings in operating costs can be tracked and achieved. A newly confirmed appointee, David Safavian, will lead the effort at OMB.
In a recent letter to administration appointees, Clay Johnson III, deputy director for management at OMB, applauded progress on achieving the president's management goals but noted that a year-end tally showed four agencies backsliding on some initiatives.
Although implementing Bush's agenda "is hard work," Johnson says, "we are serious about holding departments accountable."
Talk Shows
Phil Glover, president of the American Federation of Government Employees' National Council of Prisons, will be the guest on "FEDtalk" at 11 a.m. today on federalnewsradio.com.
Marion C. Blakey, administrator of the Federal Aviation Administration, will be the guest on the "IBM Business of Government Hour" at 9 a.m. tomorrow on WJFK radio (106.7 FM).
"Ready for President Bush's Second Term?" will be the topic of discussion on the Imagene B. Stewart call-in program at 8 a.m. Sunday on WOL radio (1450 AM).
E-mail: barrs@washpost.com
